There are only so many ways to discuss the same old charts and trends in bond markets.  So let's have a fireside chat about NFP and the current state of markets and economic data. 

Econ data is the quintessential market-mover.  If every market participant could vote for a general category of "trade motivators," econ data would be at the top of the list.  It's such a pervasive ideology that big financial media outlets will simply look at market movement and then relate it to data releases past and future.  They do this even when the market movement has nothing to do with the data! 

Case in point, I saw a headline last night saying that bond markets were in weaker territory as investors looked for stronger employment numbers today.  Wow!  That may be the stupidest thing I've ever heard!  OK, not really, but the point needed emphasis.  Think about it...  The consensus for today's NFP has been the consensus for weeks and nothing about yesterday caused investors to increase their NFP forecasts.  Objective deduction GUARANTEES that bonds couldn't have possibly been moving for the reason offered by the headline. 

Yet those headlines will continue rolling out because that's the role that econ data plays in markets and financial media.  It is the be all end all explanation, and it's made to fit the bill even when it doesn't.

How awful is that?!  It's like living in a reality that's probably real, but wondering now and again if it's the Matrix.  If there was something more to life than being spoon-fed the same old crap, would we want to know?  Or are we content with blissful ignorance?

No...  if the truth is out there, we want to know about it, and indeed we feel alive when seeking it.  I feel alive when sharing it, so this is how I'm livin': economic data hasn't much mattered for the better part of 2014! 

Look at the facts.  Data has generally been strong or improving for most of the year, especially when compared to late 2013 and January 2014, yet rates are lower.  It's really that simple. 

Sure, you'll see an obligatory movement in the logical direction suggested by data in its immediate wake, but too many times in 2014, the afternoon or ensuing days have given way to paradoxical movement.  When this started happening with NFP, it was a wake-up call for the non-believers.  Yes, something different really is going on here.  Is it about Europe?  Geopolitics?  A tradeflow imbalance coming off 2013's crazy moves? The Fed?  The ECB?  Changes in retirement account investment guidelines?  Inflation?  Or the subtle subtext in economic data that tells a different story than the headlines?

I don't know how to weight those contenders.  All I know is that bond market participants have a plan to react to today's events in several ways depending on what happens, and almost none of those plans will base a trading decision on the NFP result.  Instead they'll be based on questions like "what are other traders doing?  What technical level just got hit?  How did other traders respond?  What are stocks doing with the data?  Do stocks look like they're going to embark on the big correction?" etc... 

Underlying all that, bond market participants have a sort of "all other things being equal" stance that will result in market movement in and of itself.  None of these things have anything to do with NFP directly, but keep in mind there's a 50/50 chance that it WILL LOOK like bonds are paying attention to the data if the data happens to align with the real trading motivations.  Just don't be surprised if the opposite happens.

For what it's worth, this iteration of NFP has a historical tendency to come in weaker than expected--and a strong one at that.  Nearly 3 in 4 October NFP releases of September data come in weaker than expected by substantial amount (more than 50k).  That's offset somewhat by the fact that a vast majority of those releases also include POSITIVE revisions for the previous month.